A Texan woman stole over $800K from Polar Rig Specialities, a family-run firm. She paid off personal loans using her access to their Quickbook account. Preventing employee fraud is one of the challenges of treasury management in 2024 — amongst many others. As we’re facing a difficult economic situation, treasurers have to navigate a new level of financial uncertainty. Get ahead by reading about the main 5 challenges facing treasurers in 2024.
Trustpair is the ultimate tool for treasury teams. It prevents third-party fraud from happening and streamlines business processes, thanks to ongoing account validation. Contact an expert to learn more!
Navigating fluctuating exchange rate
It’s common knowledge that the financial markets have been extremely volatile since COVID-19, impacting the solvency of entire countries. For companies dealing with international assets and liabilities, exchange rates have a huge impact on their cash flow management and liquidity.
If you evolve on a global market, foreign exchange rate risks need to be accounted for in your overall cash management. Knowing when to buy and when to sell in which currencies makes a sizable difference in international businesses’ liquidity.
In times of heightened volatility, it’s even more important for treasury teams to gain as much visibility as possible over the direction the market is taking to help with cash flow forecasting. In turn, that ensures businesses have adequate working capital to keep going.
Treasury managers need to know their long-term organization financial resources, whether it’s to present to financial institutions like banks to get a loan, or to investors to raise investment.
Preventing internal fraud
In times of crisis, it becomes all the more tempting for employees to commit internal fraud. Increased pressure is one of the three aspects of the fraud triangle, alongside:
The perceived opportunity to commit financial fraud without being caught,
The rationalization of the ask, for example, thinking they’re only borrowing cash or deserve the money they steal.
Treasury teams need to learn how to recognize the signs of occupational fraud to protect their organizations. According to SHRM, these are the key red flags that lead to employee theft:
- Living beyond means and
- Financial difficulties.
Vendor fraud is a common type of internal fraud, where employees create fake companies (or ally themselves with a real one) to get their company to send funds over to their bank accounts. Vendor fraud also refers to scammers sending an invoice in place of your legitimate vendor. Each time your organization pays the vendor, it’s paying into the fraudster’s bank account. This challenge has grown with the rise of cyber risks: fraudsters now infiltrate company systems easily and without a trace.
To face these fraud risks, it’s important to have a global strategy: treasurers should collaborate with other teams – procurement, finance team, etc – to wipe out the problem. This is where solutions like Trustpair are useful: on top of replacing manual processes, they help finance teams face the fraud risk on a global level and communicate easily.
Remaining compliant
Financial experts know compliance is like a three-headed monster: every time you think you’ve mastered it, another head (regulation) comes up. Organizations – and specifically treasury departments – have to be constantly on the lookout for new requirements and adapt by setting up new processes and reallocating resources.
Keeping up with local laws and regulations is important for:
- Avoiding fraud,
- Avoiding fines.
Account validation is a way to do both. The challenge comes from not knowing if your operational departments have done the proper extensive controls required when onboarding a new client or supplier.
This is the case for wire transfers as well as ACH payments (learn the difference between the two here). The Nacha account validation rule specifically requires doing those checks when onboarding and when there is a change in your supplier’s credentials. It’s key to avoid fraudulent payments and operations.
At Trustpair, we strongly recommend doing account validation not only during vendor onboarding but also every time you intend to send a transaction.
That’s because you don’t always know if the credentials have been changed — either because other teams haven’t told you, or because it’s been done in secret. Both cases are conducive to major fraud, which is why your finance operations need protection. It’s also possible fraudsters hacked into your systems – or your vendor’s systems and diverted communications or resources without any chance of noticing it.
Controlling third-party credentials before sending them money means you always know who you’re sending money to. This can only be achieved with highly performant technology – especially for international companies managing thousands of third parties. For these organizations, manually checking each bank account change request would be impossible. Automated systems and SaaS (Software-as-a-Service) are the best answer to their challenge.
Being more efficient
Your time is precious! One of the challenges of treasury management is prioritizing high-value tasks. Finance automation and digitization are areas for treasury managers to explore even more in 2024.
Among so many projects, deadlines, and Excel spreadsheets, it’s becoming increasingly important to streamline your business processes. Knowing where to outsource, which tools to use, and how to use AI will be a game changer for your department.
Treasury teams nowadays have to make better decisions quicker for their companies to remain competitive. It’s also key to steer your business toward your Environmental, Social, and Governance (ESG) goals.
One way to do this is to become more efficient in your action and data analysis. Automating repetitive and low-value tasks is now a must-have for companies who want to remain competitive.
Investing in Software as a Service (SaaS) that centralizes your payment data creates smoother (and more secure) processes for your whole company. Cloud storage and access is a good use of technology that improves your corporate systems.
For example, Trustpair helps you improve collaboration with other team members and gathers all your payment-related information in one system. Our fraud detection software ensures you’re paying the right person at the right time and warns you in case of any fraud risk – or suspicious operation. You can check your business bank account and have complete visibility regardless of the banking institutions you’re using.
Protecting your company against third-party fraud
In 2022, 56% of US companies were targeted by at least one fraud attempt. 82% of senior leaders considered fraud prevention as a top priority for 2023.
Fighting fraud is one of the evergreen challenges of treasury management. Losing money to fraudsters means:
- Less cash flow for working capital,
- Reduced investment opportunities,
- Potentially having to take more loans.
It’s also a huge reputational loss that’s pushed more than one executive to leave their job. As part of their risk management strategy, treasurers have to assess client and vendor risks.
Managing financial risks is an important part of their duty to safeguard their company’s liquidity. They also need to have adequate protection against cyber-attacks, the threat of which is ever-present. 2024 is the year for increasing the reliability of your payment process to safeguard your business’s long-term future.
How software automation helps with treasury management
Treasury management solution (TMS) is THE tool to upgrade in 2024. It’s not enough to use treasury management software solutions that track your transactions. The future of finance calls for using modern services that, coupled with AI, make your work more efficient, secure, and compliant.
Let’s take a deep dive into how software automation can help you with the 2024 challenges of treasury management.
Increase collaboration between teams
Using software solutions means having one central location where all your payment data is gathered. This hub can be used as a reference, your one source of truth that’s always up-to-date.
With automation, you can wave goodbye to the many Excel, emails, and eventual post-it notes that make treasury management even more challenging. It simplifies collaboration between teams, making it easier to know where you stand and take effective follow-up actions that increase companies’ overall productivity.
For example, using Trustpair means your vendor master file always reflects your current supplier’s data. You will be able to follow your supplier’s relationship from end to end. All your invoices, purchase orders, and controls are in one secured space.
You’ll have increased visibility over the actions operational teams and managers from other departments have taken. You’ll see the information relating to your new suppliers in real time.
Better compliance to local laws
Keeping up with ever-changing regulations is no easy job. Account validation is one of the key actions organizations need to do well to protect themselves and remain compliant with US, UK, and European laws. It needs to happen, at a minimum:
- During onboarding,
- When financial information is updated.
One of the challenges of treasury management (and a huge fraud risk) is that you don’t always know when credentials have been changed. That’s why we recommend companies do account validation before any payment is sent.
Trustpair does automatic and real-time checks of your vendor’s financial information before any payments are sent. It means you’ll always know you’re compliant, even if the credentials have been changed.
It also leaves an audit trail in case of controls. You can also check your internal control policies have been followed. In brief, software automation gives treasury increased compliance.
Securing your payment process
The main advantage of using software automation for your treasury management? Eradicating the risk of third-party fraud from organizations thanks to systematic data controls along your payment chain.
Payment processes – especially manual processes – are by nature fallible and error-prone. This leads to late payment fees and an increased risk of B2B payment fraud.
On the other hand, integrating software solutions in your payment chain means:
- Smooth payments (and early payment discounts),
- Complete protection against fraud,
- Real-time alert if payment anomalies are detected.
Trustpair uses AI and pattern prediction to spot any suspicious activity before any payments are sent. We have access to international databases and otherwise hard-to-reach information to do a thorough account validation, all of that in real-time.
The results? Total protection against the risk of fraud, both from direct cyber attacks and social engineering attacks. Treasury departments have more peace of mind and can function without friction.
Your team can focus on managing the challenges of treasury management without having to worry about payment fraud. Trustpair is the tool to adopt in 2024 to be more efficient, compliant, and secure.
Learn all about the future of Treasury in the Digital Age with our latest white paper!
Key Takeaways:
- With our current economic climate, treasury management faces many challenges in 2024: foreign exchange rate, fraud, and the pressure to do more in less time.
- Using software solutions like Trustpair improves your visibility and efficiency, leading to better cash flow management. It also protects you against fraud and reduces the risks associated with manual processes.
